All Forum Posts by: Cara Lonsdale

If you have followed the timeline for the cure notice, then you should be good to move forward.  It sounded like you had issued the cure notice and the deadline had past already and you hadn't done anything.  So, thanks for the clarification.

Honestly, any and all of these items that you can add to build your case will help you in court.  If the tenant is on a month to month, the renewal is assumed unless you specify otherwise.  I think that is what @Michael Jones is referring to.  I would second his advice to issue you an official notice of non-renewal.  This may be called something different in NJ, but basically, it gives the Tenant notice that you will not be renewing (or allowing for the auto-renewal), and giving her a 30 day notice that her lease will be ending, thus requiring her to vacate.

So with a cure notice that wasn't cured, and a 30 day notice of non-renewal, you eliminate her excuses in court.

Wow!  You are brave!!!

My first piece of advice is completely remove the emotion out of it.  I laugh as I write that because I am getting all worked up with emotion on your behalf just reading your situation!

The truth of the matter is, you have started down the right path, but you haven't followed through on any of your threats, so why should she take you seriously?  If you issued her a cure notice (notice of violations for her to "cure" within a certain period of time), and she didn't cure the items, then you have basically diluted your demands to her.

My opinion is that she DEFINITELY needs to go!!!  The way you describe it, she is not only costing you more in repairs than her rent covers, but she is also jeopardizing your relationship with the other "good" tenants, whether you realize it or not.  Trust me when I tell you that the other tenants are watching this situation.  If they don't see you act when necessary, they will lose faith in your ability to provide them a safe and desirable place to live.  It won't take many of those type of incidents to make the other tenants move.

The other issue is that you may be in just as much trouble with the city for the overpopulated apartment as the tenant if the city can prove that you knew about it and did nothing.  Most states require property owners to know what is going on in their properties, and be responsible for it.  If you have already issued her a cure notice for the extra people, but then didn't follow through, that could be an issue for you with the city.  I would look into that if I were you.

I would NOT offer her money to leave.  I would assume that the unit will be trashed when she vacates, so that won't change either way.  You have a legal way to get her out if she has not cured the violations.  So take it.  Having the contractors' statements just puts icing on the cake.  

The simplest answer is that it depends.  LOL.  What I mean is that there really are alot of factors to consider, and different costs associated with each option.

To answer more specifically, I would need to know what exactly is bogging you down about managing your properties.  Is it rent collection every month?  Is it turnover?  Are the repair requests and oversight time consuming?  Or is it a combo of all of that?

Typically, you can estimate that a full service property manager will charge 10% of your rent roll.  

A full service property manager will typically handle everything from tenant screening and rent collection to turnover and managing repairs.

The pros of this are obvious.  This completely clears your plate of handling the day to day operations of your properties.

Beyond the most obvious con of lowering your cash flow by 10%, it also really depends on how much control you relinquish.  Some property managers under price rental rates in favor of getting a quick tenant, leaving money on the table.  Others may authorize repairs to more expensive contractors for ease of completion, whereas you may have shopped around for a cheaper rate.

If you are looking for a tool to just help you screen tenants and collect rent payments, you may want to consider any number of online automated systems like Zumper, which also gives you the opportunity to post listings for available properties.

If you are looking for someone to handle the turnover, you can expect to pay an average of 5-7% of the initial annual rental rate.  This seems high compared to the 10% full service.  However, the turnover expense is paid once.  If the tenant renews year after year, you aren't paying that fee over and over.

I hope this helps!  Best of Luck to you!

Calculating ARV can be as basic, or complex as you want to make it. First, you need to come up with a profile of the subject property (sq ft, lot size, location, features - pool/garage/etc), then research other properties within the neighborhood and build their profiles. Then compare profiles. You can use recent sales prices (don't go back further than 6 months, but paying very close attention to the last 45-90 days), calculate the dollar per square foot to use for profiles within the same square footage range, and create an AVR for the subject property based on what it will offer after the rehab is complete. You can use Zillow to get you started, but my suggestion would be to start looking at recent SOLD comps in the neighborhood and start building the profiles of those properties, giving value to added items like pools, garages, and single levels. Don't forget to take away value for busy street exposure, nearby detractors (backs to a commercial building or parking lot), or anything else that may steer buyers away from the property unless priced below average comps.

Congrats! You have already made such a smart decision as a first time investor by moving in! The benefits of this strategy are multi-fold. First, this will allow you to put down less money as an owner occupied Buyer. Secondly, it may help you down the road for investment #2 with the established rental income from the other units that will most likely offset any mortgage debt that could affect your Income to Debt ratio. Without knowing any of the details of your finances or LTV ratios, my only question for you to ponder would be why are you considering FHA as opposed to conventional financing? Sure, the low down payment offering is great, but you will most likely pay a higher PMI/MIP fee. Many conventional loans offer a 5% down program, which is still low, and the PMI is usually lower than FHA. I would suggest checking with your lender to give you a side by side comparison of the payments, and also when the PMI will drop off. You mentioned this being a long term investment. FHA MIP/PMI runs with the life of the loan (never drops off), where most conventional loans with PMI drop off after 5 or 10 years, or at the earliest appraisal showing 78% LTV with a request from the Borrower. Either way, I commend you on your strategy. Very smart. Best of luck to you!